A report by the National Institute on Retirement Security found that women are 80% more likely than men to be impoverished at age 65 and older, while women between the ages of 75 to 79 are three times more likely than men to be living in poverty.

Many logical reasons exist that explain the gap in financial wellness. Longer lives, more breaks from work to care for family, and less confidence with financial tasks are key contributors. It’s not surprising financial concerns weigh heavily on the minds of women of all generations.

It’s not surprising financial concerns weigh heavily on the minds of women of all generations. Brandon Conroy, Practice Director, Retirement Analytics

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According to the Society of Actuaries report “Difficulties in Gaining Financial Security for Millennials,” 51% of Millennial women say they are overwhelmed by their financial situation, compared to 29% of men. This gender disparity is prevalent across all other generations, although to a lesser extent, with 16% of men and 27% of women in the upper four generations (Gen X, Late Boomers, Early Boomers, and the Silent Generation) reporting feeling overwhelmed (see Figure 1).

Additionally, only about 50% of women say they are confident in managing investments, which is the largest gap between women and men reporting they are confident handling specific financial tasks.

This lack of confidence and overwhelming feelings lead to inaction. In fact:

25% of women ages 18 or older, and as many as 30% of women ages 30 to 44—critical years for retirement savings—say they have not planned at all for their future.

Longer Lives

Women need more money to retire purely from the fact that women live 5 years longer than men. On top of that, married women are typically 2 years younger than their husbands. According to a Merrill Lynch study (in partnership with Age Wave) titled, Women & Financial Wellness: Beyond the Bottom Line:

42% of women are afraid they will run out of money by age 80.

Unsurprisingly, 77% of people who are widowed are women. Research shows that 90% of women will be solely responsible for their finances at some point in their lives due to the death of a spouse, divorce, or other reason (MarketWatch). This is exacerbated when health costs and increasingly expensive end of life care for their spouse eat into retirement savings.

As you can see in Figure 2 the number of women above 85 years of age far outnumbers men.

Different Views and Priorities

Most care provided to older adults is done by women. Caregiving can lead to lost benefits and promotions if work interruptions occur, in addition to out-of-pocket costs. With longer life spans, this sandwich generation is growing in numbers. It leads to stress and can be financially challenging. Like parenting, it requires attention, tradeoffs, and emotional commitment.

The average caregiver spends $7,000 per year on their care recipient, which can diminish long-term savings for the person providing care (Merrill Lynch).

The study also discussed women’s perspectives on money and investing:

• Women report that when it comes to money, family is their priority; 77% of women say they see money in terms of what it can do for their families.
• When it comes to investing, about 66% of women say they want to invest in causes that matter to them. In fact, more 50% of female investors are interested in or currently engaged in impact investing, generating financial returns along with social returns, compared to 41% of men. This difference in investing priorities could sacrifice return and therefore dollars in the future.

Please note that I am not addressing the gender wage gap, as it is too big of a subject to address here and now.

Potential Improvements

There are several remedies to help women become more financially secure.

Notably, retirement calculators do not allow for planned or unplanned breaks from the workforce—breaks taken more frequently by women—to raise children or care for aging family members. Improving retirement calculators to include more of the unknowns like breaks in working life, when saving for retirement is typically paused. As leave policies change to accommodate secondary caregivers, this becomes more than just a women’s issue.

More media coverage. Even women’s media does not often contribute to smart and open dialogue about money, lifelong financial planning, and investing questions and needs. Of 1,594 pages of editorial content in the March 2018 issues of the top 17 women’s magazines, there were only five pages covering personal finance; that’s less than 1% (Merrill Lynch).

How Employers Can Help

Early financial literacy assistance from the employer is beneficial to minimizing the gender gap. A gap exists in financial literacy as well. Educating women early will increase participation so the potential breaks in service aren’t as detrimental to retirement savings.